Shortfall grows by $301M after state miscalculates Medicaid costs

OLYMPIA — The state’s budget shortfall grew by $301 million Thursday, in part because the state miscalculated how much money it would save by moving certain Medicaid patients to managed care.

The hit means the budget shortfall lawmakers must close is now roughly $1.3 billion. And that’s not counting additional money the state Supreme Court says the Legislature must put into education.

The state saved around $60 million because fewer people than expected got services from an array of state programs. However, the miscalculation of Medicaid savings and some other factors represent a $361 million hit, for a net impact of $301 million on the state budget.

One cost driver is related to a decision by the Legislature in the last budget to move around 90,000 blind and disabled people on Medicaid from a fee-for-service plan to a managed-care plan, state officials said.

“We did not get anywhere near the savings in making this big change that we thought at the time we made it,” said David Schumacher, the governor’s budget director.

Analysts say the Legislature had little data to go on when it projected how much money would be saved by switching patients to managed care. And the estimates turned out to be wrong.

In addition, Medicaid clients were using medical services more heavily than anticipated.

Beyond that, little information was available Thursday about why the estimates were off.

Analysts said they’re still trying to figure out what happened and why.

Senate Ways and Means Chairman Andy Hill, R-Redmond, said Senate Republicans will keep to their pledge not to increase taxes. The new red ink doesn’t change anything.

“I don’t see a need for major new revenue, nor do I see the stomach with the electorate,” Hill said. “I think the attitude and the appetite with the voters for new revenue is pretty low right now.”

House Appropriations Chairman Ross Hunter, D-Medina, could not be reached for comment.

The Senate is expected to release a budget near the end of the month, with the House following a few days later.

Many budget writers are predicting more bad news when a forecast comes out next week projecting future tax collections.

“I would think it would be down a couple hundred million, but that’s just a guess,” Schumacher said. “It’s not inside information.”

He’s in line with other guesses by state lawmakers. That big of a drop in projected revenue, along with Thursday’s hit, would bring the state shortfall to around $1.5 billion, not counting additional money for education demanded by the court.

“It complicates things. It’s $500 million of more pressure on the budget,” Schumacher said.